Toyota Motor Credit Fined $60M for Illegal Lending

Advocate Andy

Lending arm of Toyota withheld refunds, refused to cancel products

The lending unit of Toyota has been fined by a federal regulator for illegal conduct.

The Consumer Financial Protection Bureau (CFPB) issued a $60 million fine to Toyota Motor Credit after finding that the finance company withheld refunds owed to consumers and made it nearly impossible to cancel product bundles packaged into car loans.

"Toyota's lending arm illegally withheld refunds, made borrowers run through obstacle courses to cancel unwanted services, and tarnished their credit reports," said CFPB Director Rohit Chopra. "Given the growing burdens of auto loan payments on Americans, we will continue to pursue large auto lenders that cheat their customers."

The CFPB found that Toyota Motor Credit packaged product bundles amounting to between $700-$2500 into car financing agreements without customer knowledge or consent. The investigation further found that when customers attempted to cancel the packaged products, Toyota made the process extremely difficult.

Consumers who wanted to cancel over the phone were directed to a “retention hotline” operated by employees whose primary objective was to dissuade such cancellations. Between 2016 and 2021 alone, Toyota Motor Credit funneled more than 118,000 consumer calls through this hotline. Representatives on the hotline were instructed to keep promoting the products until a consumer had verbally requested to cancel three times, at which point the representatives would tell the consumer that it was only possible to cancel by submitting a written request.

The CFPB order requires Toyota Motor Credit to pay $48 million in refunds to consumers who were illegally charged and to pay a $12 million penalty.

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

Nashville, TN

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